The government of Southeast Asia's largest economy last week
put on hold all dealings with energy firms while it sets up a
replacement for BPMigas, which was dismantled in the wake of a
constitutional court decision.

Indonesia's energy sector has struggled to attract
investment in recent years, leading to regular criticism of
BPMigas from both the industry and politicians.

"It (the new body) must be more pro-Indonesian society, more
efficient .... It must not be pro-foreigner. Foreign companies
are allowed to operate here because we need investment but the
policy must not be pro-foreigner," Wacik said in a speech to
regulators.

National companies must get more opportunities, he said.

"This means foreigners must not get too much while we get
too little," he said, but added the government must also respect
the wishes of foreign investors or else they would leave the
country.

The court ruling that shut BPMigas follows a series of
policy decisions in the mining sector this year that have shaken
investor confidence in Indonesia, though foreign direct
investment remains robust.

Moody's ratings agency said the ruling was credit negative
for Indonesia and jeopardizes the country's attempts to increase
domestic crude production.

The decision "will likely deter new investment and
negatively affect expiring concessions", it said in a credit
outlook on Monday.

Wacik said the new unit for the Implementation of Upstream
Oil and Gas Activity, set up under the Energy ministry, will
attempt to reduce the amount of fees charged for new contracts.

President Susilo Bambang Yudhoyono said last week all
existing contracts with BPMigas would be honoured in the wake of
the court ruling. BPMigas managed contracts with oil majors such
as BP Plc, Chevron, Exxon Mobil and CNOCC
.